SEC Rejects Ethereum ETFs, but Issuers Remain Hopeful

Approval of Ethereum Exchange-Traded Funds (ETFs) is facing uncertainty as the U.S. Securities and Exchange Commission (SEC) shows resistance. Fox Business reporter Eleanor Terrett sheds light on the SEC’s stance, revealing potential challenges and conflicting opinions.

Terrett reports that sources within the SEC have given a “hard no” signal, indicating internal resistance to approving spot Ethereum ETFs. In a tweet, she mentions SEC commissioner Hester Peirce, who has been advocating for a more straightforward decision process and criticizing reliance on legal victories for ETF approvals.

Despite the SEC’s resistance, Terrett highlights optimism among asset managers like BlackRock, who have a successful track record of getting ETFs approved. BlackRock expresses confidence, citing the smooth launch of Bitcoin spots as a potential catalyst for Ethereum spot ETF approval. Terrett expects further insights into the SEC’s stance through engagements with S-1 registration forms.

Expectations for spot Ethereum ETFs vary. Bloomberg ETF analyst Eric Balchunas suggests a 70% chance of approval in May, while JP Morgan’s Nikolaos Panigirtzoglou is less optimistic, predicting a 50% chance. JP Morgan analysts remain cautious, citing regulatory and judicial considerations and uncertainty surrounding Ethereum’s classification as a commodity or security.

The recent delay in the SEC’s decision on Fidelity’s Ethereum Spot ETF extends the evaluation period until March 5, 2024. The final decision on spot Ethereum ETFs is expected between late January and August 2024.

Overall, the approval of spot Ethereum ETFs is uncertain, with conflicting signals from the SEC, varying expectations from experts, and ongoing regulatory uncertainties.